The question is attached to the image. 65Essay Questions5. State your preference between the direct and indirect method for reportingCash Flows from Operation activities. Justify your answer. (Chapter 5., Section2.3)6. Assume that a company purchases land for €100,000, paying €20,000 cashand borrowing the remainder with a long-term bank loan. What is the cashflow from Financing activities? How do you expect the company's CFO, CFIand CFF to change in the following years based on this purchase, assumingthe company works with IFRS? (Chapter 5, Section 3.2)7. Discuss the differences in the evaluation methods for PP&E permitted underIFRS and under US GAAP. What other differences exist in the measurement ofPP&E between IFRS and US GAAP and how do these differences affect theresulting financial statements. (Chapter 4, Section 4.1)S. Polyzos - FINA21 Midterm Revision

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Principles of Accounting Volume 1

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Chapter16: Statement Of Cash Flows

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Problem 4MC: Which of these transactions would be part of the financing section? A. inventory purchased for cash...

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(i) What are the current financial position and the recent financial performance of this company? (ii) Should the company's bank provide it with the finance for a loan to undertake a project at a cost of $2.5 million and on what basis.
5. Suppose Mr. Chen lends P500,000 cash to the entity. At the same, the entity uses part of the money to repay the amount owed to a creditor and holds the remaining amount of P400,000 in the bank account. Which of the following effects on the accounting equation is correct?Select one: a.Assets increase by P500,000 and liabilities increase by P500,000 b.Assets decrease by P100,000 and liabilities increase by P500,000 c.Assets increase by P400,000 and liabilities increase by P400,000 d.Assets increase by P400,000 and liabilities decrease by P500,000
6.On a statement of financial affairs, a company's liabilities should be valued at Select one: a.the present value of future cash flows. b.the amount expected to be paid if the company could honor its debts. c.net realizable value. d.the amount required for settlement. e.replacement cost.
A)What is the amount of RSA, RSL and the income gap amount? B) Calculate the duration gap. C)What is the change in this bank’s net income if the interest rises by 1%, does it go up or does it go down? Show work D) What happens when the interest rises by 1% to this bank’s asset value, liability value and the net worth in dollar amounts? Show work.
Which of the following transactions is a financing activity? Select one: a. Cash paid for purchase of equipment b. Dividend payments to shareholders, paid in cash c. Inventory purchased for cash d. Sales of product, for cash
Which of these transactions would be part of the financing section? A. inventory purchased for cash B. sales of product, for cash C. cash paid for purchase of equipment D. dividend payments to shareholders, paid in cash
Which of the following would be classified as a cash outflow from an operating activity? a. Purchase of an investment b. Payment of dividends c. Purchase of equipment d. Payment of goods purchased from suppliers
When a firm sells its accounts receivable to raiseshort-term cash, it is engaging in a strategycalleda. factoring.b. financial planning.c. equity financingd. debt financing.e. drafting
Answer TRUE or False to the following statements/questions: A) Does the statement of cash flows explains the difference between net income and the change in the cash balance? B) Investors and management use the statement of cash flows to evaluate a firm's profitability? C) True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans? D) The financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E) Buying property, plant and equipment would be considered a cash outflow from financing? F) The financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts? G) Suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in…
a)Calculate the equity (total asset –total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) b)Calculate the duration and convexity of the both asset and liability sides; c)If the interest rates go up by 1%, using the duration and convexity rule to determine the net worth of the bank and the equity to asset ratio; d)In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise? e)Do you agree with the following statement? Explain why.“The information about a bond’s duration and convexity adjustment is sufficient to quantify interest rate risk exposure.”
a)Calculate the equity (total asset –total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) b)Calculate the duration and convexity of the both asset and liability sides; c)If the interest rates go up by 1%, using the duration and convexity ruleto determine the net worth of the bank and the equity to asset ratio; d)In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise? e)Do you agree with the following statement? Explain why.“The information about a bond’s duration and convexity adjustment is sufficient to quantify interest rate risk exposure.” please can you answer part d and e
Which of the following statements are correct?I. A company's choice of accounting principles for financial reporting purposes affects net cash flow for the accounting period.II. A company's choice of accounting principles for financial reporting purposes does not affect operating cash flow.III. If a company sells its receivables, this will increase operating cash flow.IV. If a company sells its receivables, this will increase financing cash flow Select one: A. I and III B. I,II and III C. II and IV D. I and IV

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5. State your preference between the direct and indirect method for reporting Cash Flows from Operation activities. Justify your answer. (Chapter 5, Section 2.3)